‘Talk of $100 oil is pie in the sky’, says strategist

Oil prices fell on Tuesday, despite a recent Saudi production cut announcement. The downward pressure on crude signals demand outlook is still a center stage concern.

“The market has been second guessing a recession here for a year and half. That’s been undermining the demand outlook, and I think that’s going to continue,” Ben Laidler, eToro global markets strategist, told Yahoo Finance Live.

“The best they can expect here is to stabilize the price or manage the decline,” he said. “Talk of 100 dollar oil is pie in the sky, quite frankly,” he added.

Over the weekend, Saudi Arabia said it will slash its oil output by another 1 million barrels per day starting in July. Crude prices rallied on Monday following the announcement but pared gains later in the session.

On Tuesday morning, both West Texas Intermediate (CL=F) and Brent (BZ-F) futures were down more than 1%.

“Not only is demand an issue, but also we have Russia basically pumping as much oil as they possibly can, whatever their quotas are supposed to say, to try to fund their war,” Tom Essaye, Sevens Report Research founder told Yahoo Finance Live.

Saudi Arabia, the world’s top oil exporter is going it alone with the voluntary cut, as the Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to stick to their production target through 2024.

“I don’t think that this [Saudi production cut] is going to materially change the price of oil,” said Essaye.

WTI is down more than 7% year-to-date, while Brent futures are more than 5% lower during the same period.

Oil related stocks have also declined amid pressure on the underlying commodity. The Energy Select Sector SPDR Fund (XLE) is down more than 9% year-to-date.

Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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